Good afternoon. My name is Rebecca and I'll be your conference operator today. At this time, I would like to welcome everyone to the Universal Electronics Third Quarter 2013 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions) Thank you. Ms. Becky Herrick of LHA, you may begin your conference.

Thank you, operator. And thank you all for joining us for the Universal Electronics Third Quarter 2013 Conference Call. By now, you should have received a copy of the press release. If you have not, please contact LHA at 415-433-3777. This call is being broadcast live over the Internet. A webcast replay will be available for one year at www.uei.com. Also any additional updated material non-public information that might be discussed during this call will be provided on the company's website where it will be retained for at least one year. You may also access that information by listening to the webcast replay. After reading a short Safe Harbor statement, I will turn the call over to management. During the course of this conference call, management may make projections or other forward-looking statements regarding future events and the future financial performance of the company, including the benefits anticipated by the company due to the continued strength of the subscription broadcasting customers, both domestically and internationally, and its ability to add new customers; the continued leveraging of the company's technologies and products innovations, allowing for the entrance into new markets; the company's continued ability to embed its technology into smart devices such as smartphones, tablets, smart TVs, IPTV devices, game consoles and over-the-top services, which are accepted by its customers in the marketplace; the continued growth in smart devices and advanced connectivity products; and the company’s ability to attract and retain new and existing customers due to its continuous innovation of new products and technology solutions. Management wishes to caution you that these statements are just projections and actual results, or events, may differ materially. For further details on risk, management refers you to the press release mentioned at the onset of this call and the documents the company files from…

Thank you, Becky, and welcome, everyone. Our third quarter results represent a continued trend of sequential top and bottom line growth in 2013. Net sales of $142.4 million were up 14% over the third quarter of last year and represent a quarterly record for our company. Earnings per share reached $0.62 for the quarter, above expectations and also the highest EPS for any quarter in our company's history. We are the leader in the global remote control market as we supply more than one-third of the remote control devices in the world today, and our core business continues to drive growth for the company. Our Consumer Electronics OEM business has exhibited strong growth this year, not only in the sales of remote controls, but also a significant increase in embedded software and technologies in next-generation smart TVs. Subscription broadcasting remains a strong performer, spurred by growth, both domestically and internationally. Our subscription broadcasting customers include the world's premier pay TV providers and we continue to deepen these relationships in addition to adding new customers around the globe. With our core business providing the company's foundation, we're able to leverage our strengths in technology and product innovations to enter new markets. We have targeted smart devices and are seeing the initial results, with key wins in software embedded in game consoles, over-the-top platforms and mobile devices. While we are excited about the progress thus far, we are just getting started. Innovation has always been, and continues to be, critical to our success. The innovative solutions that our team has developed over the last decade, our vast expertise and experience in AV control protocol, combined with our technical and patented protection of these novel methods of home entertainment control are unparalleled. This powerful combination has us even more encouraged about our long-term…

Thank you, Paul. As a reminder, our results for the third quarter of 2013, as well as the same period in 2012, will reference adjusted pro forma metrics. Third quarter 2013 net sales were a record $142.4 million, up 14%, compared to $124.9 million for the third quarter 2012. Driving this growth was strong sales into the subscription broadcasting market, where we continue to gain share, both domestically and internationally, an increase in sales in the OEM channel, as well as initial licensing revenue into the smart devices market. Business category net sales were $129.7 million, compared to the third quarter of 2012 net sales of $111.9 million. Our Consumer Category net sales were $12.7 million, compared to the third quarter 2012 net sales of $13 million. Gross profit for the third quarter was $40.7 million, or 28.6% of sales, compared to a gross margin of 29.4% in the third quarter of 2012. It's important to remember that last year's third quarter results included a lump sum payment of $2 million related to our successful settling of a patent infringement case. Full operating expenses were $28.9 million, compared to $25.5 million in the third quarter of 2012. Breaking down our operating expenses, R&D expense was $4.2 million, compared to $3.5 million in the third quarter of 2012. SG&A expenses were $24.7 million, compared to $22 million in the third quarter of 2012. In addition to increased variable costs such as delivery and freight and bonus and commissions resulting from higher sales volume, we continued to invest in product innovations and technologies such as UEI QuickSet and Control Plus, as well as the sales support functions necessary to gain traction in the burgeoning smart device channel. Operating income was $11.8 million in the third quarter of 2013, compared to $11.2 million…

Thanks, Bryan. Our reputation for excellence in innovation and our proven track record of execution, has positioned us as the global leader in wireless control technology. Our financial results for the first nine months of 2013 are a testament to that and demonstrate our continued growth opportunity. We reported net sales growth of 14% and grew operating income 24% during the period. UEI's success has been determined by our ability to anticipate the needs of our customers and consumers and we are constantly pursuing new technologies that build upon the success we have created over the past 25 years. Our strategy remains unchanged. We are focused on developing the innovative technologies that facilitate the simple control of the ever-changing home entertainment environment. This will expand our global market opportunity, deepen existing customer relationships and allow us to win new ones. Stay tuned. I'd now like to open it up for questions. Operator?

(Operator Instructions) And your first question comes from the line of Jason Ursaner from CJS Securities. Jason M. Ursaner – CJS Securities, Inc.: Good afternoon. Congratulations on a strong quarter, guys.

Hey, thank you.

Thanks. Jason M. Ursaner – CJS Securities, Inc.: In the TV market, in terms of volume, I guess, the year started off showing gains relative to last year, but some recent reports have been moderating quite a bit heading into the holiday season. So I guess, I'm just wondering if you guys are seeing this trend in your results, and even if the market in Q4 isn't showing volume growth that maybe has been expected, would you still expect to grow through that because of the increased content from embedded technology in the actual TV, as opposed to just the remote in prior years?

Yes. Those market reports are probably generally true. It's difficult to forecast into the fourth quarter. Most of our – even though we're in it, the sales through on the first shipments hasn't been proven out yet. But our expectations are, as they are for the year, most of the orders are already in. We've also been seeing, as I mentioned during my earlier comments, some share shift and some embedded technology sales that have increased our position with specific customers without regard to the growth or shrinkage in the market. But overall this year, the TV market has been better. Last year was probably a low over the last five years. So things have returned to be a little bit better this year. Jason M. Ursaner – CJS Securities, Inc.: Okay. And how much content does the embedded technology in smart TVs and the actual TV add relative to what's just in a remote? I mean is it like essentially two remotes shipping, one for the actual remote in the TV, or it's pretty different content?

Well, typically the technology we embed will relate to the controlling of other devices. So it's remote control-related. But we'll embed software in the television, for instance, with QuickSet where it will aid the user in setting up the original remote or remotes, because we do have some TVs that are being shipped with multiple remotes, that will help the user set up those remotes automatically or nearly automatically. And that's an embedded sale where we will actually embed technology in the chip inside the TV that goes along with the remote that was shipped with the TV. Jason M. Ursaner – CJS Securities, Inc.: Okay. And you previously talked about the inclusion of your embedded mobile technology in at least one of the major game consoles. So with both of those launching in Q4, without needing to discuss any specific customer, what magnitude of revenue from that market have you guys embedded in your Q4 guidance?

We've just presumed again, the initial shipment volumes for the units we're in. And we can't talk a lot about what's happening there yet. But there's some sales embedded in both Q3 and Q4 for the platform. Jason M. Ursaner – CJS Securities, Inc.: So like without talking about the – I guess, forecasted volume, can you give a general range on your dollar content?

Jason, we're not going to provide that just yet. We're just giving the top level, the total sales, which we said between $126 million and $134 million. Jason M. Ursaner – CJS Securities, Inc.: Okay. I guess I'm just trying to get some type of better quantification of the opportunity there, short-term and long-term, given that – I mean it's essentially starting to be priced into the share price by investors. So just trying to get some better details.

Well, it's something that's just beginning now. In terms of giving any sort of granular detail on it, unfortunately, we can't. Obviously, there's only a few companies on earth that make game consoles. We don't want people to back into any forecasts of those companies based on any forecasts that we give. So, unfortunately, we, at this point, can't disclose who we're with or any sort of granularity on the units and/or pricing. Jason M. Ursaner – CJS Securities, Inc.: Okay. Thanks. Appreciate those details and look forward to seeing you guys at the conference in January.

Great. Thank you.

And your next question comes from Steven Frankel of Dougherty & Company. Steve Frankel – Dougherty & Co. LLC: Good afternoon. I want to dig into the smart device market for a minute. Would you care to share, either the revenue contribution from smart devices in the quarter or maybe, just the number of SKUs or customers you have in software sales today?

No. Steve, this is Bryan. We don't break out the detail of revenue by license, and we definitely don't do it by customer, unless they're a 10% customer. We've never done that and we're not going to begin right now.

Yes. The only granularity I'd give there, Steve, is that we're also probably going to over time have to redefine what smart device means. Because I think to the general public, it means phones and tablets. But what we're seeing is a lot of the consumer electronics companies are making all of their devices “smart”. TVs are becoming smart, Blu-ray players are becoming smart, AV receivers are smart, over-the-top platforms are smart, tablets and phones, mobile phones are obviously, all smart devices. I mean all these cloud-based products, products that can be connected to an IP network are becoming more intelligent and, as a result, are helping to drive both our technical and patented properties to be able to make them easier to use and set up, because as they're connected to each other, in many cases, they can self-discover and not only set themselves up, but configure the inputs and menus for the user automatically. So to name names, I mean we name a major consumer electronics company and they probably have one or more SKUs in their portfolio that we're working on either an embedded app, an embedded chip, or an embedded technology, or combination thereof, to enable a smarter AV control experience for the user. And then you have, of course, the traditional smart devices, tablets and smartphones that we're also being embedded in. And every major provider of those, on the Android-side anyway, have one or more SKUs that have an embedded app that eases the user's experience with AV. So it's becoming a growing trend in both the CE side of the house, as well as mobile, to make their devices smart. And they're looking for app developers and people with embedded technology like us to help pop them. Steve Frankel – Dougherty & Co. LLC: And I know there were some announcements around KitKat last week and they talked about remote controls. But that's kind of below – pluming below what you do. Correct? It's not anything in the operating system that's trying to replace your IP?

No. No, what it does is, it'll allow that our properties to be used more easily by the app developer or the device maker. Steve Frankel – Dougherty & Co. LLC: Okay.

And they're further enabling, through the OS, the use of the AV control, but the AV control libraries and apps and set-up routines and all of the other things that we do are not being embedded. They're being done by, again, the app developer or the hardware maker, or both. Steve Frankel – Dougherty & Co. LLC: And while we're on that subject, any update on Peel?

There's no current update. The matter is still before us and we don't have anything to report on that just yet. Steve Frankel – Dougherty & Co. LLC: Okay. And a high-level question, where do you think your major subscription broadcast customers are today in terms of next generation set top roll-out? Is there a lot of new product coming next year? Or next year is a year of kind of further penetrating the market with the innovations we've seen this year?

Well, it varies by operator. Obviously, they're usually in a design cycle. So when they finish the design, they usually will go through a rollout over the course of at least a year. And then they begin work on the next one, of course, once the first one launches. So they're all at various levels of implementation of next generation boxes. And quite frankly, again, like I just said, once they finish one, they begin to work on the next one. So they're in a constant cycle of improvement, upgrade and developing next generation applications for the new box. So we work alongside them really closely. Again, some of those relationships are very long term. And we've powered their devices for, in many cases, more than a decade. And I would say some pretty exciting things are happening there. I think the over-the-top threat; the opportunity for the current incumbent subscription broadcaster is pretty big. And they recognize that and are developing some pretty interesting things to be unveiled next year and really the year after that. Steve Frankel – Dougherty & Co. LLC: And you commented last quarter that you saw your core CE customers migrating to more sophisticated solutions. Is that trend continued into Q3 and Q4 as you look forward?

Yes. I think what's happening is they're doing more sophisticated, particularly on the control side, and for other things. And then what happens typically is those features then migrate down the product line. So they start typically at the higher end of their product line and then migrate their way to the mid-line of their product. Steve Frankel – Dougherty & Co. LLC: Okay. Great. That's all I have for now. Thank you.

Okay.

(Operator Instructions) Your next question comes from the line of Corey Barrett of Pacific Crest Securities. Corey M. Barrett – Pacific Crest Securities LLC: Hi. Good afternoon.

Good afternoon. Corey M. Barrett – Pacific Crest Securities LLC: So my first question pertains to the last, which is sort of the mix shift to more feature-rich remotes. Can you comment on what you're seeing there on the service provider front?

Yes. Look, I think that they're all looking at remotes that are more intelligent, easier to set up. They understand the value of that to both the consumer and their own service providers. Again, many of them receive calls from consumers, so they would love to see a reduction in those calls. So the easier we can make the install, the easier we can make the setup, the easier we can make the configuration of the inputs on the television or the AB receiver, all the better for them and the consumer. So we're seeing a lot of interest in these features we're bringing out. So they're bringing out more sophisticated product than your traditional three device set-it-up-with-a-code type of product. Many, or I would say, most of them, are looking at those next generation designs to be better. Corey M. Barrett – Pacific Crest Securities LLC: Okay. Thanks. And then on the operating expense side, the rate of growth that we've seen sort of through the first nine months of the year, should we expect a similar rate of growth sort of through 2014, as you continue to pursue the mobile or connected device opportunity?

Yes. No. I would say no, because we've got this new smart channel, we didn't have to invest in engineering and even sales support functions, which is more from a technical support position. So we did have to invest – through Q3, we're up about 60 basis points. But next year, especially with the traction we're getting in licensing revenue – I'm not going to provide guidance for 2014, but to answer your question, the leverage should be greater in 2014 than in 2013. Corey M. Barrett – Pacific Crest Securities LLC: Okay. Thank you. And then Latin America in Q2 was very strong. Can you comment on, or can you say how much revenue was from Latin America in the quarter? Or if not comments on growth there?

Yes. We don't break that out typically, but we're doing well in Brazil. About a couple years ago, we opened up an entity in Brazil and we've got approximately 100 people working in Brazil, which is basically an assembly plant, and it's done really well. It's grown on a percentage basis, significantly over the last couple of years. Corey M. Barrett – Pacific Crest Securities LLC: Okay, and is that – would that help benefit gross margin long-term or the units they're assembling sort of lower ASP, and so it offsets there?

Yes. Similar to what we have now. I wouldn't say [indiscernible]. Corey M. Barrett – Pacific Crest Securities LLC: Yes. Okay. Okay. Thanks. That's all I got.

Your next question comes from Ian Corydon from B. Riley Company. Ian Corydon – B. Riley & Co. LLC: Thank you. Just a follow-up on that last question. I wonder if you could just talk about the subscription broadcast market and the kind of growth rates you're seeing in the U.S. versus South America versus Europe and Asia? And then how the growth breaks down in those markets between subscriber-adds versus increased revenue per unit?

Yes. There were a number of questions in there. I think what we've seen is growth across all markets. Some of the percentage growth has been higher. Latin America has been a strong grower for us for the last couple of years in terms of percentage growth. The Americas, overall, including the U.S. and Canada, actually have been a very good growth this year. In terms of the number of subscriber adds, the net subscriber adds are nil. So what's happening is, we're actually garnering both more market share, upselling to higher value products, and also increasing the product sales to these customers, so gaining a higher share of their total dollar spend. So it's been share gain, it's been some market growth. We still do get a lot of gain here from churn. So we look more at gross subscribers than net. There's a lot of repair and replacement. That's the other thing about our business that's different from other hardware providers to the subscription broadcasting market. Remotes have a life of their own, and they get thrown against the wall when your team is losing, or chewed up by your dog, or thrown away by your children. We love dogs and children, by the way. So there's a lot of use and abuse of remotes that need to be repaired and replaced. So we've seen a good growth here in both turnover of boxes – anytime you see upgrades in boxes to HD DVR or now over-the-top type services, you're going to see a higher sales of remotes. So – and we've seen it again in every region. I can't – I don't know of a region that we have that's not growing right now, differentially, in percentage, but they're all growing. Ian Corydon – B. Riley & Co. LLC: That's perfect. Thank you.

And your next question comes from Jason Ursaner from CJS Securities. Jason M. Ursaner – CJS Securities, Inc.: Thanks for the follow-up. Realize you don't want to provide any specific update on the Peel litigation, but I guess just qualitatively, your consumer electronic customers, what's their response been to the announcement of the litigation? And were some of the OEMs even fully aware of your IT portfolio and mobile?

Well, it's a good question. I can't really speak to their full awareness. If they weren't before, they're probably more so now. The general reaction we've gotten, I mean remember most of the companies that we sell to that are major customers, or potential customers, are all very large companies who have a fair respect for patents. Many of them have their own patent portfolios themselves. They usually don't overlap with our patent portfolio, which is very strong in the area of AV control. But – so they're very respectful of the fact that we're protecting our property and our assets just like they would. So the reaction we've gotten from them has been positive. No negative was felt from it as far as customer reaction to our filing of a patent lawsuit. Jason M. Ursaner – CJS Securities, Inc.: Okay. And have you seen that lead to more inquiries on what your technology can do for – from the embedded space?

Sure. It helps. I mean, because again, once they look up the IP portfolio we have, remember when we sell products to people, usually, the features that are embedded therein or the features in the product that we sell it for, often there's a grant of a necessary Use Rights license to our IP portfolio as a result of the sale of our product, right? So they value the relationship with UEI and as they become a large customer, they can gain access to a lot more features in their product that are part of what we offer both technically and many of those technologies are covered under our patents. So they get access to that as well, as they are a customer of ours. Jason M. Ursaner – CJS Securities, Inc.: Okay. Great. Appreciate that.

(Operator Instructions) And at this time, there are no further questions. I would like to turn the call back over to Paul Arling for the closing remarks.

Okay. Thank you, everybody, for joining us on the call today and for your continued interest in our company. I think it's important for us to note that we'll be participating in three conferences this winter. Soon we'll be at the Deutsche Bank Small and Mid-Cap Conference in Florida on November 19. We'll be at the CJS Securities New Ideas for the New Year conference in New York on January 15. And we'll also be at the UBS One-on-One Symposium in Boston on February 11. So all three of those are before our next call that will be scheduled for mid-to-late February after our year-end. Also, if you're attending CES this year, we'll be hosting a booth from January 7 to 10 where we'll be demoing and explaining many of our technology and products. So to the extent, any of you can make it there, it’d be great to see you at our booth, so we can demo some of our newest and greatest stuff. We hope to see you at one or more of these events. Thanks for being on the call today, and goodbye.

This concludes today’s conference call. You may now disconnect.